A Research On The Impact Of Interest Rate Liberalization Upon Investment Efficiency Of Chinese Listed Companies

In 1996 the people's bank of China liberalized the domestic inter-bank offered rate, a move seen as a breakthrough in the interest rate market, then the domestic interest rate liberalization continues to accelerate. And there is a correlation between the interest rate controls and the enterprise investment efficiency. The enterprise must seek financing before making investment decisions. Meanwhile, the financing price exactly reflects the investment cost, and the interest rate control also impacts the enterprise financing scale, then the interest rate liberalization will affect the level of enterprise investment efficiency. Although there are a lot of empirical research between the financial liberalization and the corporate investment at home and abroad, so far studies on the relationship between the interest rate liberalization and enterprise investment efficiency are nearly blank, especially for the study of the microscopic enterprise level.Based on this, this paper constructs interest rate liberalization index to measure the level of development of interest rate liberalization in China, and uses the Return on Invested Capital(ROIC) to measure investment efficiency. Then, based on the data from 1996-2010 Chinese 937 listing companies, a total of 8397 observations, this paper uses the multiple regression models to study on the impact of the interest rate liberalization on enterprise investment efficiency, and studies on impact of the interest rate liberalization under different size and different actual controller. At last, we do the robustness test.Our final results show that, the degrees of domestic interest rate liberalization show a rising trend, and with the liberalization of domestic interest rate, enterprise investment efficiency is higher, i.e. the interest rate liberalization has a positive role in promoting investment efficiency of enterprises. Meanwhile, we also find that the positive role between interest rate liberalization and enterprise investment efficiency is more significant for the larger scale of enterprises, and for the smaller part of enterprises, we don't find same outcomes. And also, for the enterprises which the actual controller is state-owned enterprises(SOEs), the positive correlation between them is more significant too.